India and China continue to be the big markets for precious metals jewelry in 2012

India and China will continue to be the big markets for precious metals jewelry in 2012 but higher Gold prices, an uncertain economy and fluctuating exchange rates will continue to affect buying habits.

China’s growing romance with gold will continue and may reshape the jewelry climate in Asia, as Chinese demand challenges India for the top consumer spot. In other parts of the world, the United States and Europe, there is a trend toward higher-end products.

China’s emergence as a challenger to India in gold consumption for jewelry was seen in the third quarter 2011 report by the World Gold Council. For the third quarter alone, WGC listed Indian jewelry demand at 125.3 tons and Chinese jewelry demand at 131 tons.

“For the first time in a long time, jewelry demand in China was higher than India,” said Marcus Grubb, WGC managing director for investment. “That has only happened in four quarters since the start of 2003.”

In 2010, gold used for jewelry in India totaled 746 metric tons, while China’s fast growing market utilized 400 metric tons for jewelry.

Jewelry consumption in India in 2011 and into 2012 has been affected by concern over inflation and the level of the rupee, said David Lamb, managing director–jewelry, for the World Gold Council in London. As for the rupee, Lamb said when the price hits 30,000 rupees for 10 grams of gold jewelry, the situation becomes fraught and prospective buyers become more reluctant.

“I think if the Indian consumer is so involved in gold on an ongoing basis, volatility questions on the market cause the consumer to step out and take stock,” Lamb said.

“People have bought less significant weights–not stepped out but downgraded until the dust settles and they achieve their own personal levels with the price and the economy.”

James Steel, precious-metals analyst at HSBC, agreed that the rupee is a key element in Indian. “I think in India the rupee will play an important part,” he said.

Steel said the rupee in early December hit a multi-month low and consequently that has restrained Indian demand. Against the dollar, the rupee has slumped in recent months, hitting record lows against the dollar late last year before picking up in the early weeks of 2012. “I think in both the East and West, changes in real income and consequently employment levels will be really important,” Steel said. “The sluggish real income growth is restraining jewelry demand in the West.” Jewelry demand is positive, it seems, but within limits, he said.

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Posted by admin on Jan 16 2012. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry